What does the property management industry look like in 2022? Here are some statistics showing that property management is a secure industry to enter.
Property management is a great way to build long-term residual income streams, however many are concerned about whether they will be economically successful. To alleviate these fears here's what we suggest:
DO. YOUR. RESEARCH.
There is no such thing as being overprepared when making decisions that have a direct impact on your life and how you invest your time for years to come.
Here are some statistics about the current trends in the property management and real estate industries:
1- OVER 35% OF ALL US HOUSES ARE RENTER-OCCUPIED
The U.S Census Bureau states that 35.6% of all US homes are renter occupied. This is the largest percent of renter occupied homes since the 37% rental rate in 1965.
2- MOST RENTAL RATES HAVE INCREASED OVER THE PAST YEAR
According to iPropertyManagement, “average rent prices have increased at a rate of 8.86% year over year since 1980.” Historically speaking, the trend of rent-increase over time is moderately consistent.
Additionally, between 1940 and 2020 the median monthly gross rent in the United States rose in every decade since the 1940s.
This is unsurprising due to increasing inflation since the 1940s, however it is important to recognize that the earning potential for property management services is increasing alongside the upward trends in the economy.
3- HOMEOWNERSHIP RATES ARE DECREASING
The U.S. Census Bureau reports that homeownership rates are again dropping as the prices of homes continues to increase. For many purchasing a home is unattainable, causing an increase in the portion of the population looking to rent.
Low turnover and higher rental prices are driving a favorable market for landlords, providing an increasing need for property managers and rental services.
One of the key demographics driving this rise in rentals is the millennial generation, an age group from 25 to about 40 years old. As esplained by 2nd Kitchen, this group makes up nearly half of the rental market at 40%. Among the millennial population homeownership has decreased dramatically, with 90% of millennials choosing to rent instead of buy.
4- RENTAL VACANCY RATES ARE DECLINING
As the rental industry has grown, rental vacancy rates have declined. In 2009 vacancy rates hovered at a high of about 11 percent. In the years since, the national rental vacancy declined, indicating good news for rental property owners who do not want their unit to sit on the market.
5- THERE ARE MORE THAN 2,600 NEW RENTERS EVERY DAY
Homeowner rates are falling, renter vacancy rates are in decline, and each day there are more and more people renting.
The Rental Protection Agency reports that the increasing growth rate of new renters means about 2,654 individuals are entering the rental market every day.
So what does this mean?
6- MORE THAN 544 NEW LANDLORDS JOIN THE MARKET EVERY DAY
An increase in renters will also increase the amount of landlords. It is important to differentiate the position and duties of a landlord from those of a property manager.
Merriam-Webster defines a Landlord as the owner of property (such as land, houses, or apartments) that is leased or rented to another.
Wikipedia defines a Property Manager as a person or firm charged with operating a real estate property for a fee, when the owner is unable to personally attend to such details, or is not interested in doing so.
Thus the landlord maintains ownership of the asset and the property managers services the asset.
The Rental Protection Agency reports that the increasing growth rate of new landlords means about 544 individuals are entering the rental market as landlords every day.
That's about 5 new renters for every 1 new landlord entering the market each day.
This is why property managers are of the utmost importance. Not all of these landlords want to manage and service each of these properties themselves, many look to property management companies to take care of their investments. With more landlords come more properties in need of a property manager.
7- NEARLY HALF OF PROPERTY OWNERS USE A PROPERTY MANAGER
Many landowners do not want to be held back by the demands of their tenants. The current market rates demonstrate that between 44% and 51% of property owners look for and hire property managers. That is a lot of homes, especially when you multiply a single owner by the average of 3 houses owned by each landlord!
It is important to note that building up a portfolio of properties to manage takes time. If a property management business is managing hundreds or thousands of properties, it is probably the result of years of dedicated effort and a team of people committed to building long-term relationships with their investors and their tenants.